TRAINING KNOWLEDGE WORKERS IN THE PHILIPPINES

TRAINING KNOWLEDGE WORKERS IN THE PHILIPPINES
Prof. Jorge V. Sibal U.P. SOLAIR August 2003

Training Knowledge Workers
Knowledge Work is the key competitive edge of business enterprises facing the competitive world of globalization.

A knowledge worker is anyone who makes a living out of creating, manipulating or disseminating knowledge.

Types of Knowledge Workers
High Level Knowledge Workers are mostly mental workers like professionals (doctors, teachers, consultants, etc.), managers, entrepreneurs, administrators, etc. (Peter Drucker)

Types of Knowledge Workers
Knowledge Technologists are those who work with their hands and brains in the information technology (IT) industry. (Peter Drucker)

Key assets of modern enterprises. The challenge to companies is how to develop and harness their knowledge workers through training and education strategies.

Philippine Economy in Transition
Globalization have exposed Philippine industries to intense competition from imported products and foreign competitors.

Transition to a Knowledge-based Economy
The transition of local firms from assembly line operations to knowledge-based operations for survival, growth and competitiveness became a must.

Philippine industries in order to survive, grow and compete, have to reinvent themselves from the second-wave technologies (assembly-line production) to the third wave knowledge-based operations.

As an effect of globalization, many companies “have divided their workforce into a small group of professionals and technical staff and a large group of casual workers.”

1. Professionals and technical staff receive a wide range of benefits and training making them highly skilled knowledge workers 2. Casual workers minimum wages and benefits mandated by the Labor Code which resulted in relatively high wages despite their low level of skills.

We now have dual skills level among our labor force. On the one hand, the country is fast gaining competitive advantage in the category of knowledge workers. On the other hand is a large pool of unskilled and low skilled workers.

Since 1998, the Philippine skilled labor is number one in terms of quality, affordability most of our skilled workers are the ones filling up the middle-level positions in high tech industries of Malaysia, Singapore and other countries.

However, the greater bulk of the unskilled and low skilled labor force is mostly absorbed by the informal sector in the service and agriculture industries characterized by low productivity and low wages.

This has become big burden for the economy since the Philippines is losing its competitive advantage in labor intensive processing to lower wage Asian neighbors like China, Vietnam, Cambodia, Nepal, Indonesia, Thailand, etc.

The Country’s Preparedness in Entering a Knowledge-based Economy
Many Philippine manufacturing and agricultural industries were generally unprepared. These include: appliance paper poultry

The notable exception is the export industry led by the electronics subsector accounting for 75% of the total exports at present.

These industries have become globally competitive as a result of transformation via technological leapfrogging through selective knowledge-based adaptation and operations.

The net outcomes of the performance of Philippine industries are not very promising- an over-all decline of performance as a proportion of GDP, from 40% in 1980 to slightly less than 35% in 2000 and manufacturing declining from 27% of output to 25%.

Non-traditional electronics export firms on the other hand picked-up from a very low base in the 1990s (Lim and Montes) This has resulted in the increase of professional and technical workers (or knowledge workers) by almost two times from 1956 to 2000 as a percentage of the total number of occupations.

The manufacturing industries have been adapting modern processes, employing more knowledge workers, and less of the low skilled labor force. This phenomenon is also known as “jobless growth”.

Professional and technical workers have increased by almost two fold from 1956 to 2000 as a percentage of the total number of occupations of employed people mainly as result of the growth of electronics industries.

Proprietors, managers and administrators declined in numbers and percentage to total occupation from 1956 to This illustrates the degree of streamlining of bureaucracies of industries in order to make them lean and competitive during the liberalization period.

From 1981 to the present, the number of knowledge workers is increasing in both numbers and percentage of occupation showing the importance of high-level knowledge workers in globally competitive enterprises.

Analysis of Preparedness of the Philippines
it will eventually use third-wave technologies, and technological leapfrogging (Posadas and Roque, 1987) in transforming the mostly second-wave manufacturing and services industries to the knowledge-based operations.

Technological leapfrogging or reverse engineering is the strategy of mastering selective third-wave technologies and at times bypassing certain technologies of the second-wave that are already obsolete. (Posadas, 2000)

“It involves the buying or renting of high technologies from abroad, in order to analyze and learn, and eventually improve on them, thereby gaining replicative and innovative capabilities”.

Technological leapfrogging in the Philippines is applied differently compared to the experiences of Japan, South Korea, Taiwan, and lately Malaysia, China and India which required strong State intervention.

In the Philippines, the strategy is also spearheaded by the State but the main actors are the private industry, their associations and link with the academe.

The private sector selects the high technologies as well as finances the R&D efforts that are normally coursed through the academe.

A measure of the technological standing of the Philippines in Asia is the Information Society Index (ISI) where it is ranked ahead of Thailand, China, Indonesia and Pakistan.

Table 2- Information Society Index Ranking in Asia (2000)
Category Country Rank Scores Skaters Japan ,093 Score: above 3,500 Singapore 11 4,014 Striders Taiwan 18 3,177 Score: above 2, Korea 22 2,931

Table 2- Information Society Index Ranking in Asia (2000)
Category Country Rank Scores Sprinters Malaysia ,583 Score: above 1,000 Phils ,012 Thailand ,010 Strollers China Score: below 1,000 Indonesia Pakistan Source: The Worldpaper,

Another index that will benchmark the Philippines performance with other countries in the Asia Pacific region is the Knowledge-based Economy Development Index (KDI). The country is behind Malaysia, Thailand and China but is ahead of Indonesia and India.

Country Position by Components of KDI in Asia Pacific (2000) (top 22 countries included)
KNOWLEDGE INDEX COMPUTER INFRASTRUC-TURE INFOSTRUC-TURE EDUCATION AND TRAINING R&D & TECHNOLOGY Japan 2 8 3 10 1 Australia 7 6 11 New Zealand 13 14 17 South Korea 15 16 Singapore 19 Malaysia Thailand 18 21

Country Position by Components of KDI in Asia Pacific (2000) (top 22 countries included)
KNOWLEDGE INDEX COMPUTER INFRASTRUC-TURE INFOSTRUC-TURE EDUCATION AND TRAINING R&D & TECHNOLOGY China 19 18 20 Philippines 22 Indonesia 21 India

The National HRD Program of the Philippines
The Philippines enjoys a comparative advantage in HRD. It has always given top priority to education.

Compared with other countries in Asia and the Pacific, the Philippines fares well in providing budgets for education as well as in enrolment in tertiary education.

2001 APEC survey of 81 MNCs cited in a Philippine country paper (Tesda, 2003) concluded that the “large pool of educated, English-speaking and highly trainable manpower continued to be the driving force in attracting foreign capital to the country.”

Despite the favorable HRD efforts of the government the country still suffers skills shortages especially in the managerial, professional and technical knowledge workers.

According to TESDA, this is caused by the faulty educational system, the policy of encouraging labor export and the continuing technical changes happening in the country.

S&T and R&D The Philippines needs a lot of improvement in science and technology (S&T) and in research and development (R&D).

S&T and R&D Dr. Roger Posadas (2000) assessed that the overall condition of S&T as well as R&D in the country has remained “weak and substandard”.

S&T and R&D Posadas cited the ff. indicators:
number of R&D scientists and engineers in the Philippines only 155 per million which is less than half of the 1980 UN target of 380 for less developed nations.

S&T and R&D Among the lowest in the ASEAN, the figures in NICs like South Korea and Taiwan range from 1,000 to 2,000, and in highly developed countries, 2,000 to 4,000.

S&T and R&D The budget allocated for R&D
one of the lowest in the Asia Pacific region at a per capita of 68 cents in 1984. As a percentage of GDP, the country’s R&D expenditure is only 0.22% in 1992 which is below the 1980 UN target of 1% for less developed countries.

S&T and R&D NICs usually spend 1-1.8% of GDP, and developed countries, 2-3%. R&D done by private sector is likewise low at 23.6% contribution to R&D expenses compared 50-80% in developed countries and NICs.

S&T and R&D In terms of inventions, the country fared better. The total number of patents in the Philippines awarded from in either the USA or the European market is 52.

S&T and R&D This is more than that of Indonesia (37) and Thailand (33), but less than that of Malaysia (66), Singapore (213), New Zealand (566), South Korea (3,036), Australia (4,701) and Japan (204,597).

ICT Infrastructure The Philippines still needs to improve its infrastructure for information and communication technology (ICT).

ICT Infrastructure With perhaps the exception of cellular phone subscribers at more than 6.3 million for a penetration rate of almost 15% and a very high per capita text messages, almost all other indicators pale in comparison with other countries.

ICT Infrastructure The number of personal computers (PCs) installed in the Philippines as of 2002 reached 1.37 million or barely 2% of the total population. (International Data Corporation as cited by TESDA, 2003).

ICT Infrastructure 69% of these PCs were located in private businesses and only 13% were in households. Government offices and educational institutions accounted for only 10% and 6%, respectively.

ICT Infrastructure Internet penetration is also low at 2.0% of population which is surpassed by neighboring countries like Singapore at 24.9%, Malaysia at 15.8%, Thailand at 3.8%, Taiwan, and Hong Kong. The country however fared better than Indonesia at 0.9%, Vietnam at 0.3% and Laos and Cambodia at 0.1% penetration rates.

ICT Infrastructure Internet access are mostly in the urban areas
Records of the National Telecommunications Commission (NTC) showed that only around 50% of all municipalities in the country have internet access.

ICT Infrastructure The reasons cited for low internet access are-
high cost of PCs high internet access rates lack of telephone lines (9 lines per 100 persons) and unstable or lack of electricity.

ICT Infrastructure Despite the lack of ICT facilities and infrastructure, Filipino ICT workers are among the best in the world. According to the Far Eastern Economic Review in 1999, the Philippines ranked second to India in terms of quality, cost and availability of skilled IT workers in Asia.

ICT Infrastructure The country is reputed to have the “largest pool of English-speaking IT professionals in the world” (Cabacungan, 2001). Unofficially also, the Philippines has the best and the most number of skilled text senders in the world.

Institutions Spearheading the transition to Knowledge-based Economy
Government Department of Education (DepEd) Commission on Higher Education (CHED) State Universities and Colleges (SUCs) Technical Education and Skills Development Authority (TESDA)

Government Responses to HRD Problems
The Philippine Constitution recognizes the importance of HRD. Among the recent laws passed to strengthen HRD in the country are: RA 7796, the TESDA Act; RA 7786, the Dual Training System Act of 1994; RA 7722, the Law Creating the Commission on Higher Education in 1994; RA 8439, the Magna Carta for Government S&T Workers; RA 8972, the Higher Education Modernization Act of 1997; and RA 8792, the E-Commerce Law.

Private Sector and Civil Society’s Reponses to HRD Development
Private Educational Institutions under the DepEd Private Universities and Colleges under the CHED Technical Educational Institutions under the TESDA Associations of Educational Institutions- Association of Christian School and Colleges (ACSC), Catholic Educators Association of the Philippines (CEAP), Philippine Association of Colleges and Universities (PACU), Philippine Association of Private Schools, Colleges and Universities (PAPSCU), Philippine Association of State Universities and Colleges (PASUC), and the Association of Private Technical Institutions (PAPTI).

Private Training Institutions of Companies like Meralco Foundation, etc. Training Institutes of NGOs, Cooperatives, Trade Union federations, religious congregations, etc. Information Technology and E-commerce Council (ITECC) Philippine Internet Commerce Society (PICS) Information Technology Association of the Philippines

Phil. manufacturing firms spent more on training compared to Malaysia but lower compared to Indonesia, Singapore, Taiwan and Thailand. In the services sector, Phil. training expenses were lesser compared to Singapore, Taiwan and Thailand, but more expensive compared to Malaysia and Indonesia study of APEC among MNCs (TESDA, 2003)

The MNCs indicated that the skills of their workers that need to be improved are in management and supervision, interpersonal and communication skills, planning and problem solving, use of technology, self-management, multi-skilling and teamwork

There is now more direct link up between the industry and the academe. In-house training programs of companies tied-up with TESDA are given tax exemption privileges. Big business conglomerates have been partnering or buying into private colleges and universities

The professional practice of HRD in private, state and even non-government enterprises, is the most effective form of capability building for knowledge workers. It is mainly focused on managerial and technical skills requirements of the firm.

Its main tool is the management development program (MDP) for the high-level knowledge workers, and skills and capability training and development for the lower end knowledge workers.

Organizations of HRD practitioners and professionals
Personnel Management Association of the Philippines (PMAP) Employers Confederation of the Philippines (ECOP) Management Association of the Philippines Philippine Industrial Relations Society (P.I.R.S.) Philippine Society for Quality (PSQ)

Organizations of HRD practitioners and professionals
Philippine Society for Training and Development (PSTD) Philippine Association of Labor-Management Councils (PALMCO) Philippine Association of Labor-Management Cooperation (Philamcop) National Academy for Voluntary Arbitrators (NAVA)

Training practices for knowledge workers
On-the-job training and dual-tech which include learnership, apprenticeship, training on probation, etc. Work laboratory or vestibule training Job Rotation In-house training programs using local or outside trainers and resources persons Participation in outside training programs, local or abroad

Management Development Techniques
Use of task force organization set-up Understudies for key positions Performance management system Problem solving conferences with staff specialists Management conferences within organization Management conferences involving various organizations University-based management development programs -- company-sponsored scholarship programs Participation in professional or trade organizations.

Best Practices in Training Knowledge Workers
IBM Philippines, Inc. To meet IBM’s demand for professionals and graduates with strong IT skills IBM established joint venture with the Asian Pacific College. Tying up with an educational institution is encouraged by the government in exchange for tax deduction privileges. (Ortiz and Barredo, 2002),

St. Luke’s Medical Center (SLMC) SLMC conducts in-house training programs instead of sourcing them from outside entities. Administered by the Training and Development Committee, SLMC allocates 3-4 million pesos annually for training programs for the hospital’s associates and employees. The committee has developed certificate and diploma technical courses. (Ortiz & Barredo, 2002)

Philippine Daily Inquirer (PDI) The editorial and production operations of the PDI are almost completely computerized. PDI Employee Services and Development Center provides a continuing learning program for the employees’ professional and personal development. Its training and seminars cover topics on personality development, family and work relations, business and management, information technology, etc. (Marasigan, 2002)

Nestle Philippines, Inc. Nestle believes that training and people development are critical to enhancing the over-all competitiveness of the firm. It offers various seminars that meet functional and personal development objectives covering topics such as management and leadership, work values, lifestyle planning, family management and skills training. (Occiano, S., 2002)

Asian Transmission Corporation (ATC) ATC regularly conducts local and off-shore advanced training programs in Tokyo & Singapore. Its motto is “quality products are produced only by quality people”, hence it “prioritizes employee training and development”. All employees from managers to rank-and-file are trained by the ATC Trainers Group or external resource persons. (Barredo & Ortiz, 2002)

Mabuhay Vinyl Corporation (MVC), a chemical company based in Southern Philippines- Recruits employees from graduates of best universities from Luzon, Visayas and Mindanao such as Mindanao State University and Xavier University Uses interviews, appraisal test and bidding (volunteerism) for promotion and relocation In-plant MBA for managers and supervisors (Ortiz, 2002)

United Laboratories. Unilab’s employees are all at least college graduates including contractual workers. It runs a comprehensive 3-month training course for their professional service representatives which incorporates a thorough physical and psychological testing and skills training. Educational grants are also extended to the dependents of the employees.

Central Azucarera Don Pedro Due to lowered tariffs, CADP suffered its first loss in To survive, it availed of government safety net incentives and embarked in a comprehensive 1.5 Billion pesos expansion and modernization program. A major component of this program is heavy investment in training of employees (51% received various technical skills training in areas like welding, carpentry and mechanical repairs.)

Training Practices in 3 Companies –Training Philosophy
Training Philosophy of Jollibee Jollibee Foods Corporation is a training dependent organization. Employee’s performance depends on effective training.

Training Philosophy of Phil. Batteries The company aims to be the preferred company to attract and develop the best people, training them to be skilled

Training Philosophy of CS Garment Investment in training to develop skills and work values is the key to a competitive and high performing workforce.

Best Practices in 3 Companies- Training Structure
Jollibee Training is administered by a 25-personnel training department with nationwide operations and assisted by in-house direct-line trainers and outside speakers.

Phil. Batteries The training department is a component of a Ramcar Academy which services other members of the Ramcar group of companies.

CS Garment The training section is composed of three people and supported by all section heads and other qualified technical trainers for in-house training.

Training Practices for Rank-and-File Employees
Jollibee Formal ladderized training that caters to both employees of the company and the franchise operators Recruits college graduates for store operations are who passed internship program in their senior years in a university accredited with Tesda and Ched, the regular OJT training and probation training.

Jollibee Training laboratories (kitchen and stores) are utilized to develop skills and values like honesty and integrity, ability to listen and “work as a family”. Three-day computer skills seminars for all employees.

Phil. Batteries Curriculum is ladderized and administered by in-house and outside trainers. Training programs are not tied-up with the academe or government agency. Techniques in training include classroom-type seminars, OJT, task forces, quality circles, team fora, coaching and mentoring.

CS Garment Utilizes 18-month or 12-month TESDA-accredited dual training system (DTS) for out-of-school recruits. Utilizes a 320-hour training program to upgrade knowledge and skills of daily wage employees OJT, apprenticeship program and seminars for all employees

Training Practices for Management and Supervisory Personnel
Jollibee 5-week In-house Management Development Program (MDP) for managers and 25-day Entrepreneurial Management Program (EMP) for managing directors of franchise stores conducted by the AIM. Attendance to specialized in-house training, public seminars subsidized membership in professional and socio-civic organizations.

Phil. Batteries Specialized technical and supervisory/managerial courses in MDP curriculum, attendance to outside seminars and sending of select employees to formal graduate studies

CS Garment Attendance to outside training seminars both local and abroad

Training Budgets and Standards
Jollibee 30 to 35 million pesos ($566,000 to $660,000) per annum. Each rank-and-file employee is provided with 6 to 7 training days per year. Each managerial employee is allocated 10 training days per year.

Phil. Batteries 442,345 pesos ($8,346) per year mostly in-house programs. Each employee is allocated 4 training days per year.

CS Garment Three million pesos ($56,600) per year. Training days per employee is not indicated.

Training Needs Assessment (TNA)
Jollibee Performance management system, job competency assessment, human resource information system (HRIS), and succession planning (for executives only)

Phil. Batteries Annual TNA is conducted and focus group discussions (FGDs) among department heads and managers

CS Garment Performance appraisal system, career pathing, interviews and testing, HRIS, feedback system and the use of ISO standards for all employees. Training needs for managers are determined individually by top management since there are only 19 managerial employees.

Training Evaluation Use of FGDs
Jollibee Use of FGDs Phil. Batteries Use of evaluation form after every training (or feedback evaluation only)

Training Evaluation CS Garment Use of trade tests, written tests, individual efficiency evaluation, annual efficiency evaluation, actual performance tests, and observation of trainees work attitudes and values

References Amante, M.S.V., Ofreneo and Ortiz (1999). Philippine Skills Training and Policy Reforms, ILO-Manila. Barredo and Ortiz (2002). “Asian Transmission Corporation and its Corporate Philosophy on Work Life”, Cases on Business Initiatives, Makati City: The Ford Foundation. Cabacungan, Jr., Gil C. (2002). “DTI Chief Defends Call Center Strategy”, Inquirer News Service, July 14, Cabacungan, Jr., Gil C. (2001). “RP Mission to Woo European Investors”, Inquirer News Service, May 14, Capones, Erlinda M. (1998). “Human Resources and Regional Development: The Philippine Case”, Philippine Labor Review, July – December, Department of Labor and Employment, Manila. DECS-BTVE 1993 Annual Report Doctor, R.M. (1995). “Technical and Vocational Education and Training in the Formal Sector Both Public and Private”, TESDA Doronila, Ma. Luisa C. (1998). “The Emergence of Schools and the Transformation of the Philippine Educational System”, UP CIDS Chronicle, January – June, UP System, Quezon City. DOST, “DOST Medium term Plan ( )”, Drucker, Peter. ( ). “Management Challenges for the 21st Century” ECOP & Ayala Foundation, Inc. (2002). Cases on Business Initiatives, Makati City: The Ford Foundation. EDCOM Report of 1991 Gatchalian, Miraflora (1999). “TQM Practices and Tools for the Compleat IR/HR Manager”, Philippine Industrial Relations for the 21st Century: Emerging Issues, Challenges and Strategies, Quezon City: Philippine Industrial Relations Society and UP SOLAIR, pp Gener, Reynaldo (1999). “Adjustments in Work Processes and Organizations”, Philippine Industrial Relations for the 21st Century: Emerging Issues, Challenges and Strategies, Quezon City: Philippine Industrial Relations Society and UP SOLAIR, pp

References Guiang, A. (1993). “The Future of Technical and Vocational Education in the Philippines” Lasap, Jr., S. L. (1995). “Technical Teacher and Trainer Education and Training in the Philippines”, TESDA Lim, Joseph and Manuel Montes ( ) “Structural Adjustment Program after Structural Adjustment Program, But Why Still No Development in the Philippines?”, Quezon City, UP School of Economics. Lloyd, Daniel & W. Salter (1999), Corporate Social Responsibility and Working Conditions in the Philippines, Manila: ILO. Maayo, Geraldine (1998). Marasigan, Mary Leian (2002). “Philippine Daily Inquirer and their Employee Services Center”, Cases on Business Initiatives, Makati City: The Ford Foundation. Mendoza, Jr., S. A. (1995). “Financing of Technical and Vocational Training in the Philippines”, TESDA Occiano, Salvador (2002). “Nestle Philippines, Inc. and their Family-friendly Benefits”, Cases on Business Initiatives, Makati City: The Ford Foundation. Ofreneo, R. (2002). “Globalization, Liberalization and Philippine Agro-Industrial Readiness”, paper circulated during the 23rd National Conference of Employers, May 30-31, 2002 at Westin Plaza Hotel, Makati City, Philippines. Ofreneo, R.E. (1996). “Human Resources Development and Major Vocational-Technical Education Concerns”, UP SOLAIR. Oliva, Erwin Lemuel (2002). “E-commerce Law Deadline One-Year Extension Sought”, Inquirer News Service, July 14, Oliva, Erwin Lemuel (2003). “Philippines Produces Fewest MS-certified Professionals”, Inquirer News Service, Jan. 28, Ortiz, I. (2002). “Mabuhay Vinyl Corporation and their Expressions of Corporate and Personal Volunteerism”, Cases on Business Initiatives, Makati City: The Ford Foundation. Ortiz & Barredo (2002). “IBM Philippines and their Work at Home Program”, “St. Luke’s and its Total Quality Work-Life Committee”, Cases on Business Initiatives, Makati City: The Ford Foundation.

References Posadas, Roger (2000). “An Assessment of the State of Science and Technology in the Philippines”, Chap. 1, and “Perspectives from Academe: Technological Leapfrogging as a Strategic Option”, Chap. 27, Managing Technology for Global Competitiveness: The Philippine Experience, Eds. Epictetus Patalinghug, Jose Tabbada and Elvira Zamora, Quezon City: UP Center for Integrative and Development Studies. Posadas, Roger and Celso Roque (1987). Toward a Scientific and Technological Self-Reliance for the Philippines, Quezon City, UP Science and Research Foundation. Pigors and Myers (1977). Personnel Administration, McGraw-Hill Inc., New York. Terry, George (1953). Principles of Management, Richard D. Irwin, Inc., Illinois. Tesda (2003). “Skills Shortage and Training Needs of MNCs in the Philippines”, Issue no. 20, “The Country’s ICT Industry in Focus”, Issue No. 19, and “National Technical Education and Skills Development Plan ”, Tullao, Jr., Tereso (2000). An Evaluation on the Readiness of the Filipino Professionals to Meet International Standards, Makati City: Philippine APEC Study Center Network (PASCN). Vergara and Valismo (1998). Wurfel, David (1957). “Trade Union Development and Labor Relations Policy in the Philippines”, Industrial and Labor Relations Review, Vol. 12, No. 4, July, pp

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